Boohoo shares surge as retailer acquires Oasis and Warehouse

Shares in Boohoo surged in Wednesday trading after it announced its intention to acquire the fashion brands Oasis and Warehouse. The online fashion company’s stock rose 10% in early trading hours, marking a record high of 433.50 pence.

The online retailer gained popularity while the pandemic forced many land-based stores to close. To expand its influence on the market, the company announced its plans to acquire fashion brands Oasis and Warehouse. After the acquisition deal, Boohoo will gain intellectual property rights over the two brands that went into administration earlier this year.

The online fashion retailer expects revenues to increase by 25% after it adds Oasis and Warehouse to its brands. The company claimed that the acquisition will cost Boohoo ₤5.25 million. Oasis and Warehouse used to be in the same group as Karen Millen, which is another company that Boohoo acquired out of administration in 2019.

The acquisition will bring Boohoo a step closer to becoming a UK retailer that will lead the way to economic recovery amid the COVID-19 pandemic. The online fashion group stated that it will make sure to integrate Oasis and Warehouse into its virtual retail platform. This will enable the two brands to benefit from Boohoo’s insight into the online fashion business.

The expected revenue growth of 25% is lower than Boohoo’s revenue jump of 44% for the previous year. This being said, the company is expected to show results that will surpass the revenue of other major fashion retailers.

While the months between March and May were tough for many businesses, Boohoo’s revenue surged 45% to ₤368 million. The sales for the same period rose 65% in Europe, excluding the UK, and 83% in the US. As for the first-quarter sales in the UK, Boohoo enjoyed an increase in revenue of up to 30%.

Analyst stock price forecast and recommendation

According to MarketBeat, analysts have an average price target of ₤360.36 for Boohoo Group PLC. The company has a potential downside of 14.5% from its current price of ₤421.25. These results are based on the data of 10 research reports conducted in the past 90 days.

The same media also provides the recommendations of 16 analysts who gave the Boohoo Group PLC stock a consensus rating of “Buy”. Among the 16 polled analysts, 12 ranked the stock as “Buy”, 3 as “Hold” and 1 – as “Sell”.